40 Years in the Energy Desert
By T. Boone Pickens
When we were children we learned, from Exodus, about the Children of Israel wandering in the desert for 40 years. When we were children, 40 years seemed like, well, a lifetime.
I’m 85 and 40 years still seems like a lifetime.
But it has been over 40 years since President Richard Nixon addressed the nation on the need for a national energy policy. That was on Nov. 7, 1973, during the Arab oil embargo precipitated by war in the Mideast.
“By the end of this month, more than 2 million barrels a day of oil we expected to import into the United States will no longer be available,” the president said, speaking from the Oval Office. “Our supply of petroleum this winter will be at least 10 percent short of our anticipated demands, and it could fall short by as much as 17 percent.”
If ever there was a chance to develop and implement a wide ranging energy policy, that was the time. But the Watergate scandal intervened and, as has happened so many times since, a national energy policy got pushed -- not just to a back burner, but completely off the stove.
Forty years and seven presidents later, we are no farther along with a cohesive energy policy than we were when Richard Nixon delivered that speech. In fact, we may be worse off. Energy leadership in our government is more fragmented today than ever.
Fast-forward to Jan. 24, 2012, when President Obama made energy a major point of his State of the Union address. “Imagine,” he said, “a future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world.”
That was nearly four years after I announced the Pickens Plan to get America off OPEC oil and onto our own resources. When the plan was announced, natural gas was still seen as a semi-precious resource, with the price of natural gas sold to electric companies that summer at a peak of $12.60 per thousand cubic feet. There was more demand in the energy sector and in the bio-chemical sector than we had reserves to meet.
I was then big into wind and solar as a way to generate electricity and free up natural gas for better uses. I liked wind and solar because the potential is huge and because they are priced on the margin -- that is, you can charge the same amount it would cost an electrical generation company to use natural gas.
A year later, the Potential Gas Committee issued its biennial report and, for the first time, included what it called “unconventional” gas reserves. Those are what we now call “shale gas” reserves. The production of natural gas went through the roof and the price dropped through the floor. The development of horizontal drilling and fracturing techniques had unlocked oceans of natural gas under the continental United States.
According to the Energy Information Agency of the Department of Commerce, the price of natural gas to power companies in November 2008 was $6.66 per thousand cubic feet -- nearly half the price it had been. Between the drop in natural gas prices and the recession, solar and wind development came to a screeching halt.
Many players in the oil and gas industry saw this as a terrific opportunity to keep us from returning to the situation that President Obama had described as being dependent on “unstable parts of the world” to meet our energy needs.
Domestic oil production has increased to the point where one of the responses to the oil embargo -- a ban on exporting oil -- is now seen as unnecessary and unwise. There are serious discussions of slowly feeding oil in the Strategic Petroleum Reserve into the world markets. Major retailers, express and telecommunications companies, and long-haul trucking companies are actively purchasing natural gas-powered trucks.
One manufacturer, Freightliner, calculates that a small trucking firm with 10 over-the-road trucks traveling 50,000 miles a year, would save almost $192,000 in fuel costs for each truck, every year.
To move that process forward, state after state is changing its tax rules and other regulations to bring natural gas in line with diesel. When I started the Pickens Plan, I made the mistake of looking to Washington to implement the modest changes that would alter the course of energy in the United States.
What I found was there was no person, department or agency in control of our energy policy at the federal level. The Departments of Energy, Defense and even State have a say in everything from carbon emissions to the Keystone XL pipeline. And they all take their cues from the White House.
With this in mind, American businesses and state governments have taken the map of our energy future into their own hands.
Read more: www.realclearpolitics.com Follow us: @RCP_Articles on Twitter